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Abano posts flat first-half profit as dental acquisitions offset margin squeeze

Thursday 20th December 2018

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Abano Healthcare reported a flat first-half profit as dental practice acquisitions helped offset skinnier margins from its New Zealand operations and the sale of its radiology business a year earlier. 

Net profit attributable to shareholders was unchanged at $6 million in the six months ended Nov. 30. Revenue was up 7 percent at $142.4 million, bolstered by the acquisition of 14 dental practices in the period, most of which were large Australian practices. 

Abano spent $31.6 million on the practices, which are expected to deliver annualised gross revenue of $26.1 million and earnings of $6.2 million. The two months of additional earnings captured in the reporting period helped offset smaller earnings margins at Abano's Lumino The Dentists unit in New Zealand and tough trading conditions for its Australian Maven business. 

Earnings before interest, tax, depreciation and amortisation from Abano's continuing operations rose 12 percent to $17.7 million. 

Chief executive Richard Keys had warned shareholders of a potential margin squeeze at the company's annual meeting in October, saying plans to step up acquisitions amid softer conditions in Australia would weigh on the business in the short-term. 

"We have invested significantly into business infrastructure and growth initiatives in the past two years to lift capability, support the growing size of our trans-Tasman group and drive practice performance," Keys said today. "Pleasingly, early benefits are already starting to be seen."

Abano's board declared an interim dividend of 16 cents per share, unchanged from a year earlier. The dividend is payable on Feb. 22 with a Feb. 11 record date. 

The shares were unchanged at $6.50, and have dropped 35 percent so far this year. 

(BusinessDesk)



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